Small Scale Redundancies

Employment law solicitor Natalie Ruane provideds guidance on how to manage small scale redundancies.

Although the press are reporting that the economy is picking up, we are still getting lots of calls about redundancy procedures and, in particular, the best way to manage small scale redundancy processes where only a few people are affected.

It is important to remember that different considerations apply when more than 20 people are being made redundant but when smaller numbers are involved there isn’t any particular “legal” process. Employers just have to make sure that the employee has been consulted with and has had a reasonable opportunity to challenge the process.

However, the starting point when considering if redundancy is the right option is to establish that a situation exists which meets the statutory definition of redundancy. In other words, the employer must be able to show that:

it has ceased, is ceasing or intending to cease to carry on the business for the purposes of which the employee was employed by it (business closure);

it has ceased, is ceasing or intending to cease to carry on that business in the place where the employee was so employed (workplace closure); or

there is a reduced requirement for employees to carry out work of a particular kind or to carry out work of a particular kind at the place where the employee was employed to work (reduced requirement for employees).

The next step is to look at how to select the most appropriate person(s) to be made redundant.

The fair selection of that person/those people involves the fair application of objective selection criteria to the correct pool of employees. The factors that the employer needs to consider when identifying the correct pool are whether employees are doing similar work and/or whether their skills or jobs are interchangeable to those which are no longer needed.

Once the pool is established, fair criteria must be applied to that pool in order to identify which of the people in the pool should actually be made redundant. The selection criteria used must be objective and should be capable of being verified independently. Examples of fair criteria would be attendance record (discounting any disability or maternity related absences), disciplinary record, or quantifiable skills and experience.

Having decided upon the criteria, the employer still needs to ensure that a reasonable and thorough consultation process is followed. This means advising all those potentially affected that they are “at risk” of redundancy and giving them the chance to suggest alternative courses of action. The employer needs to consider any proposals made in good faith.

The first consultation meeting could be a group meeting but, whether it is done individually or not, the purpose of the first meeting is to explain why the business has come to the difficult conclusion that redundancies may have to be made.

The next meeting should be a one to one meeting where each member of staff affected is given the opportunity to discuss whether they have any suggestions as to how the redundancy situation can be avoided. The selection criteria that you have decided to use should also be explained at this stage, if not before.

Before this second meeting the employer should start to explore whether there are any options available other rather than redundancy, including reducing hours or offering any vacancies of whatever nature to those at risk, regardless of how suitable or otherwise the vacancies may be for the individuals in question. If there are no vacancies, then the staff at risk need to be advised of this.

If no alternatives are found, after a suitable period of time, the staff at risk should be invited in writing to a third and final individual consultation meeting. As this meeting could result in the end of the employee’s employment, the employee has the right to be accompanied by a trade union representative or a work colleague and he or she needs to be advised of this in writing.

During this third meeting, staff should be told of any responses to any suggestions that have been made as to how the redundancy situation can be avoided and should be given the opportunity to make new suggestions. Employees should be given an opportunity to comment on/challenge the score that they have been given against the selection criteria as well. The employer needs to carefully consider the comments made, together with any new suggestions for avoiding the redundancy situation that the employee may have, before any decision is given.

This means that, ideally, people should not be told that they are redundant even at the end of this final meeting. Even if there were no suggestions put forward which cause an employer to review the situation, and assuming that the employer had the evidence to answer any scoring challenges that have been made, the employer should advice the individuals of the fact that their employment is terminating by letter after the meeting. The employee must also be given a right to appeal against the decision and should be notified of this right in the decision letter.

If the redundant member of staff decides to appeal, he or she must be invited to a further meeting to discuss that appeal. This appeal meeting should, ideally, be conducted by someone more senior than the person who conducted the previous consultation meetings. As a result, it is worth considering from the very beginning who will be the most appropriate person to deal with the redundancy process and any subsequent appeal.

The fundamental things, and the hardest things to get right, are selecting the pool and the selection criteria. Identifying just a role is often not enough and time should be taken in order to ensure that the decisions made at this early stage are as fool proof as possible.

Having individuals in mind from the very beginning is also a recipe for disaster. Redundancy is not an excuse to single out poor performers or to get rid of the oldest/newest members of staff assuming that those selected will not complain because “everyone knows that times are hard”.

This bulletin is only a very basic outline of what must be done. Every redundancy situation is unique and the best advice is to take advice on the process before you start. Anyone with questions about that should contact Natalie Ruane at Burnetts Solicitors on 01228 55 22 22 or by email (nr@burnetts.co.uk).